Making the Numbers Count, Second Edition: The Accountant as Change Agent on the World-Class Team

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  • Edition: 2nd
  • Format: Hardcover
  • Copyright: 2009-06-12
  • Publisher: Productivity Pr

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 An extremely accessible delineation of the changes required to accounting, control, and measurement methods in lean organizations, this book challenges readers to take a fresh look at their accounting systems. It clarifies methods for innovative, proactive management accounting and presents techniques for simplifying accounting systems so that they serve production, marketing, and engineering sectors with equal efficiency. Updated to include current principles, practices, and tools of Lean Accounting, the second edition uses the same polemical style that made the first edition so popular. It covers ABC, VAM, performance measurement, concurrent engineering, target costing, value engineering, and life cycle costing.

Table of Contents

Preface to the First Editionp. xiii
Preface to the Second Editionp. xvii
The Proactive Accountantp. 1
Manufacturing in the Twenty-First Centuryp. 2
Criticism of Accountants and Controllersp. 3
The Proactive Accountantp. 4
Attributes of a World-Class Management Accountantp. 5
Tools and Techniquesp. 7
The Role of the Management Accountantp. 8
Summaryp. 11
Questionsp. 11
Shortcomings of Traditional Accounting Methodsp. 13
History of Management Accountingp. 15
Problems with Management Accountingp. 17
Lack of Relevancep. 17
Cost Distortionp. 19
Inflexibilityp. 22
Incompatibility with Lean Principlesp. 23
Inappropriate Links to the Financial Accountsp. 29
Summaryp. 30
Questionsp. 31
Lean Manufacturingp. 33
What Is Real Manufacturing?p. 34
The Five Critical Issues of Lean Manufacturingp. 34
Qualityp. 36
Just-in-Time Manufacturingp. 38
Shop-Floor Layout and Cellular Manufacturingp. 39
Setup Time Reductionp. 41
Synchronized Manufacturingp. 41
Inventory Pullp. 42
Total Productive Maintenancep. 44
5S Industrial Housekeepingp. 45
Visual Managementp. 45
Vendor Relationshipsp. 46
World-Class Peoplep. 48
Education and Trainingp. 48
Cross-Trainingp. 50
Transfer of Responsibilitiesp. 50
Teamworkp. 52
Participationp. 54
Flexibilityp. 55
Product Mix and Volumep. 56
Short Lead Times and Make-to-Order Productionp. 57
New Product Introductionp. 58
Value to the Customerp. 59
Agile Manufacturingp. 61
Enriching the Customerp. 61
Cooperating to Enhance Competitivenessp. 62
Mastering Change and Uncertaintyp. 64
Leveraging People and Informationp. 65
Summaryp. 66
Questionsp. 68
Simplification of Accounting Systemsp. 69
Aspects of Traditional Accounting Systemsp. 69
Why Are Complex Systems Needed?p. 71
The Lean Manufacturerp. 72
New Accounting Goalsp. 75
A Four-Stage Approach to Simplificationp. 76
p. 76
Eliminate Labor Reportingp. 76
Eliminate Variance Reportingp. 78
Reduce Cost Centersp. 79
p. 80
Eliminate Detailed Job-Step Reportingp. 80
Eliminate WIP Inventory Reportingp. 81
Establish Backflushingp. 82
p. 83
Eliminate Work Ordersp. 83
Eliminate Month-End Reportingp. 85
Eliminate Integration with the Financial Accountsp. 86
Eliminate Budgetingp. 87
p. 89
Eliminate Traditional Cost Accountingp. 90
Eliminate Inventory Trackingp. 90
Eliminate the Accounts Payable Three-Way Matchp. 92
Use Electronic Funds Transferp. 93
Summaryp. 93
Questionsp. 94
Value-Stream Accountingp. 95
How Does Value-Stream Accounting Work?p. 97
Labor Costsp. 97
Material Costsp. 97
Machine Costsp. 99
Outside Process Costsp. 100
Facilities Costsp. 101
Other Costsp. 101
Plain-English Income Statementsp. 101
Closing the Booksp. 102
"Our Corporate People Need the Traditional Statement"p. 104
Box Score: The Income Statement Is Not Enoughp. 104
Financial Benefits of Lean Improvementp. 107
Another Way to Look at the Potential Benefits of Lean Changep. 109
Decision Making without a Standard Cost: A Case Studyp. 110
Product Costingp. 113
Summaryp. 116
Questionsp. 117
Value-Added Managementp. 119
What Is a Process?p. 120
Value-Added Analysisp. 122
Definitions of Value-Added Activitiesp. 123
Uses of Value-Added Analysisp. 125
Process Mappingp. 125
Basic Method of Process Mappingp. 127
Basic Steps to Process Mappingp. 128
Analyzing a Process Mapp. 131
Root-Cause Analysisp. 132
Process Improvement and Reengineeringp. 134
Summaryp. 137
Questionsp. 138
Performance Measurementp. 139
Characteristics of the New Performance Measuresp. 140
What You Measure Should Relate Directly to Business Strategyp. 140
Use Nonfinancial Measuresp. 141
Measure the Process Rather Than the Outcomep. 142
Make Sure Measures Are Visually Presented Where the Work Is Donep. 142
Vary Measures to Suit Locationsp. 143
Change Measures over Timep. 143
Make Measures Simple and Easy to Usep. 144
Ensure Fast Feedback of Informationp. 144
Foster Improvement Rather Than Merely Monitoringp. 145
Examples of New Performance Measures at Workp. 145
Measuring Delivery Performance and Customer Servicep. 146
Measuring Process Timep. 146
Measuring Innovationp. 148
Measuring Productivityp. 149
Measuring Flexibilityp. 149
Measuring Qualityp. 150
Measuring Financial Performancep. 151
Measuring Social Issuesp. 152
Implementing New Performance Measurementsp. 153
Write a Strategyp. 154
Set Goals and Objectives for Each Strategic Issuep. 154
List the Critical Success Factorsp. 155
Validate the Critical Success Factorsp. 155
Link the CSFs to Value Streams and Other Key Processesp. 156
Develop Key Measuresp. 156
Pilot the New Performance Measuresp. 159
Expand the Measures to the Whole Plant or Companyp. 159
Summaryp. 159
Questionsp. 160
A New Approach to Product Designp. 161
What Is Wrong with the Traditional Design Approach?p. 162
Concurrent Engineeringp. 164
How Concurrent Engineering Improves on Traditional Designp. 164
Methods of Concurrent Engineeringp. 166
Cross-Functional Teamsp. 166
Integrated Approachp. 166
Detailed Analysisp. 166
Customer-Focused Designp. 166
Tough-to-Reach Targetsp. 167
Role of the Accountant in Product Designp. 167
Target Costingp. 168
Value Engineeringp. 170
Life-Cycle Costingp. 171
Including Usage Costs in Life-Cycle Costingp. 173
Calculating Life-Cycle Costsp. 173
Quality Function Deploymentp. 176
Variety Effectiveness Analysisp. 178
Role of the Accountant in Variety Effectivenessp. 179
Continuous Improvementp. 180
Summaryp. 181
Questionsp. 182
Implementing the New Approach to Accountingp. 183
Making the Changesp. 184
Read Widelyp. 185
Cultivate a Global Viewp. 186
Create a Teamp. 187
Learn about Lean Methodsp. 187
Process-Map Your Department's Activitiesp. 188
Get Actively Involved in Lean Manufacturingp. 189
Visit Other Companiesp. 190
Implementing the Accounting Changesp. 190
Training in Lean Accountingp. 191
Kaizen Event Style Methods for Performance Measurements and Value Stream Costingp. 191
Kaizen for Box Scores and Decision Makingp. 192
Kaizen for Transaction Elimination and Inventory Valuationp. 192
Full Implementation of Lean Accountingp. 194
Sales, Operations, and Financial Planningp. 194
Target Costingp. 195
What's an Accountant to Do?p. 197
Define Roles of the Accounting Departmentp. 197
Cross-Trainp. 197
Apply Lean Thinking in Your Own Processesp. 198
Eliminate Reportsp. 199
Measure Your Department's Performancep. 200
Introduce a 5S Program into Accountingp. 200
Move Accountants into the Value Streamsp. 201
Volunteer to Join Improvement Teamsp. 202
Use Visual Systems in the Accounting Areasp. 203
Summaryp. 204
Interlude: Accounting Is Boring, but Controllership Is Notp. 205
Interlude: Bean Counters No Morep. 209
South Central Bellp. 209
Automatic Feed Companyp. 210
Appendix: Accounting and Measurement Questionnairep. 213
Instructionsp. 214
Referencesp. 217
About the Authorp. 219
Indexp. 221
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